Not surprisingly, the nation's banking trade organizations came out in strong opposition to the draft legislation to overhaul financial regulation that was unveiled today. For the Independent Community Bankers Association, the main gripes center on the single regulator model and the proposed Consumer Financial Protection Agency (CFPA).

Although the ICBA says it supports "meaningful financial regulatory reform" and appreciates Sen. Chris Dodd's (D-CT) efforts, the group said in a statement:

"ICBA adamantly opposes a single federal banking regulator. The concept is a deeply flawed approach that would disadvantage our nation's more than 8,000 community banks, which have always put their customers and communities first, and would ultimately lead to less choice for consumers through a less diverse and robust banking system. Instead, we must recognize the diversity of our cultural heritage and financial system which is reflected in our current system of regulation. While our current system can be improved, it brings a unique balance and perspective through multiple agencies that reflects not only the rich and diverse fabric of our economy, but also the diversity in size and complexity of our financial institutions."

The release goes on to voice the group's dissatisfaction with the CFPA, saying that treating customers "fairly and honestly" has always been the way of community banks. The ICBA stated that examination and enforcement should remain under the auspices of the bank regulatory agencies so that community banks "are not unduly burdened for the sins of unregulated entities and out-of-control Wall Street firms."

In other words, community banks would prefer not to be lumped in with the big guys.

The American Bankers Association was also blunt in its criticism of the regulatory proposals. In a statement, ABA president & CEO Ed Yingling noted that although the ABA supports comprehensive reform, such as a systemic oversight council and regulating non-banks, "Sen. Dodd's discussion draft, however, would tear apart the existing regulatory structure only to create a new one that would produce conflicts among regulators, undermine the state-chartered banking system, and impose extensive new regulatory burdens on those banks that had nothing to do with creating the financial crisis. ABA supports comprehensive reform, but not this reform."

The release continues to say that the ABA opposes eliminating the thrift charter and the creation of a single prudential regulator, "which failed miserably in Great Britain and which would inevitably undermine the state-chartered banking system and be detrimental to community banks." It reiterated its opposition to the CFPA, as it would "put banks in the middle of conflicting regulations from two regulators with differing charges." Yingling also stated that the elimination of federal preemption would end up increasing the cost and lessen the availability of credit and other consumer financial products.